Raghuram Rajan has argued that the United States’ abrupt decision to impose a 50% tariff on Indian exports was driven less by New Delhi’s purchase of discounted Russian oil and more by political friction caused when India publicly contradicted President Donald Trump’s claim that he had mediated the ceasefire in the brief India-Pakistan conflict in May. According to Rajan, the trigger behind the tariff escalation was “the personality in the White House” and the way comments from New Delhi were interpreted in Washington rather than trade or energy considerations.
Speaking at an event hosted by the UBS Centre for Economics in Society in Zurich on December 4, Rajan suggested that Islamabad positioned itself more tactfully after the four-day fighting. Pakistan’s leadership effusively credited Trump for stopping the conflict, whereas Indian military officials stressed that the ceasefire resulted from direct communications between the two sides and not from US intervention. Rajan characterised this contrast as a key reason why Pakistan escaped with tariffs of around 16–19%, while India was hit with a 50% levy. He described the truth of the ceasefire negotiations as “somewhere in between,” but emphasised that Washington’s response was shaped by political sensitivities rather than oil-trade dynamics.
Rajan reiterated that energy purchases were not central to the dispute, pointing out that Trump had simultaneously approved Hungary’s purchase of Russian oil. He argued that tariffs stemmed from an unusually personal reaction from the administration, magnified when New Delhi pushed back against the public narrative of US mediation. He expressed hope that the long-term relationship between India and the United States will eventually settle despite the current volatility.
The tariff decision was formally framed by Washington as retaliation for India buying discounted Russian oil “despite sanctions” and for maintaining what Trump called a “one-sided” trade relationship with the US. The dispute escalated further as senior Trump advisers launched sharp attacks on India’s leadership, some of them personal and derogatory, affecting diplomatic ties. New Delhi strongly rejected the suggestion that foreign mediation had shaped the ceasefire, restating its longstanding position that India-Pakistan issues are strictly bilateral and handled through established military channels.
Rajan’s comments highlight how political messaging during the May conflict fed directly into trade consequences months later, turning a strategic relationship into a tariff confrontation in which India emerged the primary economic target.
